A STRONG consensus among astute observers of the US market has emerged that the bottom may be upon us. Prices posted their first annual increase in two years in the quarter to June, according to S&P/Case-Schiller, and a steady stream of reported increases have been coming in since then.

Average prices have fallen by 30 per cent from the 2007 peak, although as buyers of distressed property - such as ourselves - are well aware, the discounts are far deeper in selected markets with prices having dropped between 50 and 70 per cent as a wave of foreclosures washed through.

The data on individual cities is a bit noisy, but we are noticing some increase in scarcity of well priced deals in markets in which we have been active buyers - Detroit, Florida and Atlanta.There are still deals available for decent yields though, but you have to look a bit harder.

As for us, we are prepared to cautiously call this the bottom, but note that there are several things that could slow a recovery such as a failure in the US to resolve the fiscal cliff issue or a major sovereign debt issue in Europe or even Japan.

But broadly speaking, we are optimistic about price growth. The arrival of the purported bottom has brought one unwanted side effect - relentless spruiking from some vendors of US property, particularly those marketing them to foreign investors, warning of institutional investors snapping up all their inventory and jacking up prices.

We've asked some our more trusted contacts on the ground and they suggest that while there is some truth to this, the overall effect of it is being exaggerated in the same way these vendors made a huge song and dance about it when Warren Buffett talked about single-family US homes (distressed ones anyway) as a good investment in February.One of our sources says that while fund investors are looking, they often find it hard to clinch the deals because of their preference for large-scale deals.

"I receive a call or e-mail from 2-3 of these guys every week,'' the source said. "They all have millions to invest and prefer bulk deals of more than 10 units, whether it’s houses or condos. The funny thing is, when I go out and get these properties, they are never the ones to buy them."

On the likely future, we really couldn't put it better than our source: "With the way prices are, although slightly higher than last year, I just don’t see how anyone can go wrong paying market value or below for any single family home. I would stick to newer block construction, 1990 or newer. We may never see the prices we saw in 2005, but I believe there is still plenty of room for growth and resale and I don’t see the prices going down from here."

So, dear readers, we are broadly optimistic about the future of US housing, and no doubt the fact that are funds sniffing around and Mr Buffett has talked up the asset class has helped, but we take this with a bit of grain of salt.

We think investors still have another year or two to invest before all the value in this kind of investment is eroded. If you are thinking of buying, sooner is probably better and recognise that it will take you perhaps a couple of months to get set up with the terminology and background knowledge, and set up an LLC and bank account, to be in a position to buy.